At the end of March 2020, Nigeria owes China $3.121 billion (?1,126.68 trillion at USD/?361), or 3.94 percent of Nigeria’s total public debt of $79.21 billion as of September 2021, according to the World Bank.
Similarly, loans from China accounted for 11.28% of the USD27.67 billion in foreign debt stock as of the same date, in terms of external sources of funding.
China has borrowed USD 3.121 billion from the World Bank as of March 31, 2020, and the interest rates are 2.50 percent per year with a tenor of 20 years, as well as a seven-year grace period (moratorium). According to the World Bank.
Section 41 (1a) of the Fiscal Responsibility Act of 2007 requires certain phrases to be compliant. Low interest rates save the government money on interest, but extended terms allow the principle to be repaid over many years. A recently disclosed global bank document says that because of these two advantages, the yearly budget’s debt payment provisions are smaller than they would be if the loans were on commercial terms.
‘According to the paper, the $3.121 billion in loans are project-related debts. Nigerian Railway Modernization Project (Idu-Kaduna section), Abuja Light Rail Project, Nigerian Four Airport Terminals Expansion Project (Abuja, Kano, Lagos, and Port Harcourt), Nigerian Railway Modernization Project (Lagos-Ibadan section), and Rehabilitation and Upgrading of Abuja – Keffi- Makurdi Road Project are among the eleven projects (11 as of March 31, 2020) that will be completed by that date.
This loan’s influence is not only apparent, but also palpable. Taking the Idu-Kaduna Rail Line as an example, it’s now a popular mode of transit between Abuja and Kaduna. The new Abuja International Airport and the Lagos-Ibadan Rail Line, when finished, would relieve traffic on the crowded Lagos-Ibadan Expressway.
A number of these initiatives also have the additional advantage of creating jobs via direct and indirect service providers, including Small and Medium Enterprises (SMEs), according to the paper.
Remember that President Muhammadu Buhari recently wrote to the National Assembly, asking for authority to borrow $4,054,476,863 billion and €710 million, a move that caused controversy.